THE PRESIDENT: Mr. Speaker, Vice President Cheney, members of
Congress, fellow citizens:

As a new Congress gathers, all of us in the elected branches of
government share a great privilege: We've been placed in office by the
votes of the people we serve. And tonight that is a privilege we share
with newly-elected leaders of Afghanistan, the Palestinian Territories,
Ukraine, and a free and sovereign Iraq. (Applause.)

Two weeks ago, I stood on the steps of this Capitol and renewed the
commitment of our nation to the guiding ideal of liberty for all. This
evening I will set forth policies to advance that ideal at home and
around the world.

Tonight, with a healthy, growing economy, with more Americans going
back to work, with our nation an active force for good in the world --
the state of our union is confident and strong. (Applause.)

Our generation has been blessed -- by the expansion of opportunity,
by advances in medicine, by the security purchased by our parents'
sacrifice. Now, as we see a little gray in the mirror -- or a lot of
gray -- (laughter) -- and we watch our children moving into adulthood,
we ask the question: What will be the state of their union? Members
of Congress, the choices we make together will answer that question.
Over the next several months, on issue after issue, let us do what
Americans have always done, and build a better world for our children
and our grandchildren. (Applause.)

First, we must be good stewards of this economy, and renew the
great institutions on which millions of our fellow citizens rely.
America's economy is the fastest growing of any major industrialized
nation. In the past four years, we provided tax relief to every person
who pays income taxes, overcome a recession, opened up new markets
abroad, prosecuted corporate criminals, raised homeownership to its
highest level in history, and in the last year alone, the United States
has added 2.3 million new jobs. (Applause.) When action was needed,
the Congress delivered -- and the nation is grateful.

Now we must add to these achievements. By making our economy more
flexible, more innovative, and more competitive, we will keep America
the economic leader of the world. (Applause.)

America's prosperity requires restraining the spending appetite of
the federal government. I welcome the bipartisan enthusiasm for
spending discipline. I will send you a budget that holds the growth of
discretionary spending below inflation, makes tax relief permanent, and
stays on track to cut the deficit in half by 2009. (Applause.) My
budget substantially reduces or eliminates more than 150 government
programs that are not getting results, or duplicate current efforts, or
do not fulfill essential priorities. The principle here is clear:
Taxpayer dollars must be spent wisely, or not at all. (Applause.)

To make our economy stronger and more dynamic, we must prepare a
rising generation to fill the jobs of the 21st century. Under the No
Child Left Behind Act, standards are higher, test scores are on the
rise, and we're closing the achievement gap for minority students. Now
we must demand better results from our high schools, so every high
school diploma is a ticket to success. We will help an additional
200,000 workers to get training for a better career, by reforming our
job training system and strengthening America's community colleges.
And we'll make it easier for Americans to afford a college education,
by increasing the size of Pell Grants. (Applause.)

To make our economy stronger and more competitive, America must
reward, not punish, the efforts and dreams of entrepreneurs. Small
business is the path of advancement, especially for women and
minorities, so we must free small businesses from needless regulation
and protect honest job-creators from junk lawsuits. (Applause.)
Justice is distorted, and our economy is held back by irresponsible
class-actions and frivolous asbestos claims -- and I urge Congress to
pass legal reforms this year. (Applause.)

To make our economy stronger and more productive, we must make
health care more affordable, and give families greater access to good
coverage -- (applause) -- and more control over their health
decisions. (Applause.) I ask Congress to move forward on a
comprehensive health care agenda with tax credits to help low-income
workers buy insurance, a community health center in every poor county,
improved information technology to prevent medical error and needless
costs, association health plans for small businesses and their
employees -- (applause) -- expanded health savings accounts --
(applause) -- and medical liability reform that will reduce health care
costs and make sure patients have the doctors and care they need.
(Applause.)

To keep our economy growing, we also need reliable supplies of
affordable, environmentally responsible energy. (Applause.) Nearly
four years ago, I submitted a comprehensive energy strategy that
encourages conservation, alternative sources, a modernized electricity
grid, and more production here at home -- including safe, clean
nuclear energy. (Applause.) My Clear Skies legislation will cut power
plant pollution and improve the health of our citizens. (Applause.)
And my budget provides strong funding for leading-edge technology --
from hydrogen-fueled cars, to clean coal, to renewable sources such as
ethanol. (Applause.) Four years of debate is enough: I urge Congress
to pass legislation that makes America more secure and less dependent
on foreign energy. (Applause.)

All these proposals are essential to expand this economy and add
new jobs -- but they are just the beginning of our duty. To build the
prosperity of future generations, we must update institutions that were
created to meet the needs of an earlier time. Year after year,
Americans are burdened by an archaic, incoherent federal tax code.
I've appointed a bipartisan panel to examine the tax code from top to
bottom. And when their recommendations are delivered, you and I will
work together to give this nation a tax code that is pro-growth, easy
to understand, and fair to all. (Applause.)

America's immigration system is also outdated -- unsuited to the
needs of our economy and to the values of our country. We should not
be content with laws that punish hardworking people who want only to
provide for their families, and deny businesses willing workers, and
invite chaos at our border. It is time for an immigration policy that
permits temporary guest workers to fill jobs Americans will not take,
that rejects amnesty, that tells us who is entering and leaving our
country, and that closes the border to drug dealers and terrorists.
(Applause.)

One of America's most important institutions -- a symbol of the
trust between generations -- is also in need of wise and effective
reform. Social Security was a great moral success of the 20th century,
and we must honor its great purposes in this new century. (Applause.)
The system, however, on its current path, is headed toward bankruptcy.
And so we must join together to strengthen and save Social Security.
(Applause.)

Today, more than 45 million Americans receive Social Security
benefits, and millions more are nearing retirement -- and for them the
system is sound and fiscally strong. I have a message for every
American who is 55 or older: Do not let anyone mislead you; for you,
the Social Security system will not change in any way. (Applause.)
For younger workers, the Social Security system has serious problems
that will grow worse with time. Social Security was created decades
ago, for a very different era. In those days, people did not live as
long. Benefits were much lower than they are today. And a
half-century ago, about sixteen workers paid into the system for each
person drawing benefits.

Our society has changed in ways the founders of Social Security
could not have foreseen. In today's world, people are living longer
and, therefore, drawing benefits longer. And those benefits are
scheduled to rise dramatically over the next few decades. And instead
of sixteen workers paying in for every beneficiary, right now it's only
about three workers. And over the next few decades that number will
fall to just two workers per beneficiary. With each passing year,
fewer workers are paying ever-higher benefits to an ever-larger number
of retirees.

So here is the result: Thirteen years from now, in 2018, Social
Security will be paying out more than it takes in. And every year
afterward will bring a new shortfall, bigger than the year before. For
example, in the year 2027, the government will somehow have to come up
with an extra $200 billion to keep the system afloat -- and by 2033,
the annual shortfall would be more than $300 billion. By the year
2042, the entire system would be exhausted and bankrupt. If steps are
not taken to avert that outcome, the only solutions would be
dramatically higher taxes, massive new borrowing, or sudden and severe
cuts in Social Security benefits or other government programs.

I recognize that 2018 and 2042 may seem a long way off. But those
dates are not so distant, as any parent will tell you. If you have a
five-year-old, you're already concerned about how you'll pay for
college tuition 13 years down the road. If you've got children in
their 20s, as some of us do, the idea of Social Security collapsing
before they retire does not seem like a small matter. And it should
not be a small matter to the United States Congress. (Applause.) You
and I share a responsibility. We must pass reforms that solve the
financial problems of Social Security once and for all.

Fixing Social Security permanently will require an open, candid
review of the options. Some have suggested limiting benefits for
wealthy retirees. Former Congressman Tim Penny has raised the
possibility of indexing benefits to prices rather than wages. During
the 1990s, my predecessor, President Clinton, spoke of increasing the
retirement age. Former Senator John Breaux suggested discouraging
early collection of Social Security benefits. The late Senator Daniel
Patrick Moynihan recommended changing the way benefits are calculated.
All these ideas are on the table.

I know that none of these reforms would be easy. But we have to
move ahead with courage and honesty, because our children's retirement
security is more important than partisan politics. (Applause.) I will
work with members of Congress to find the most effective combination of
reforms. I will listen to anyone who has a good idea to offer.
(Applause.) We must, however, be guided by some basic principles. We
must make Social Security permanently sound, not leave that task for
another day. We must not jeopardize our economic strength by
increasing payroll taxes. We must ensure that lower-income Americans
get the help they need to have dignity and peace of mind in their
retirement. We must guarantee there is no change for those now retired
or nearing retirement. And we must take care that any changes in the
system are gradual, so younger workers have years to prepare and plan
for their future.

As we fix Social Security, we also have the responsibility to make
the system a better deal for younger workers. And the best way to
reach that goal is through voluntary personal retirement accounts.
(Applause.) Here is how the idea works. Right now, a set portion of
the money you earn is taken out of your paycheck to pay for the Social
Security benefits of today's retirees. If you're a younger worker, I
believe you should be able to set aside part of that money in your own
retirement account, so you can build a nest egg for your own future.

Here's why the personal accounts are a better deal. Your money
will grow, over time, at a greater rate than anything the current
system can deliver -- and your account will provide money for
retirement over and above the check you will receive from Social
Security. In addition, you'll be able to pass along the money that
accumulates in your personal account, if you wish, to your children and
-- or grandchildren. And best of all, the money in the account is
yours, and the government can never take it away. (Applause.)

The goal here is greater security in retirement, so we will set
careful guidelines for personal accounts. We'll make sure the money
can only go into a conservative mix of bonds and stock funds. We'll
make sure that your earnings are not eaten up by hidden Wall Street
fees. We'll make sure there are good options to protect your
investments from sudden market swings on the eve of your retirement.
We'll make sure a personal account cannot be emptied out all at once,
but rather paid out over time, as an addition to traditional Social
Security benefits. And we'll make sure this plan is fiscally
responsible, by starting personal retirement accounts gradually, and
raising the yearly limits on contributions over time, eventually
permitting all workers to set aside four percentage points of their
payroll taxes in their accounts.

Personal retirement accounts should be familiar to federal
employees, because you already have something similar, called the
Thrift Savings Plan, which lets workers deposit a portion of their
paychecks into any of five different broadly-based investment funds.
It's time to extend the same security, and choice, and ownership to
young Americans. (Applause.)

Our second great responsibility to our children and grandchildren
is to honor and to pass along the values that sustain a free society.
So many of my generation, after a long journey, have come home to
family and faith, and are determined to bring up responsible, moral
children. Government is not the source of these values, but government
should never undermine them.

Because marriage is a sacred institution and the foundation of
society, it should not be re-defined by activist judges. For the good
of families, children, and society, I support a constitutional
amendment to protect the institution of marriage. (Applause.)

Because a society is measured by how it treats the weak and
vulnerable, we must strive to build a culture of life. Medical
research can help us reach that goal, by developing treatments and
cures that save lives and help people overcome disabilities -- and I
thank the Congress for doubling the funding of the National Institutes
of Health. (Applause.) To build a culture of life, we must also ensure
that scientific advances always serve human dignity, not take advantage
of some lives for the benefit of others. We should all be able to
agree -- (applause) -- we should all be able to agree on some clear
standards. I will work with Congress to ensure that human embryos are
not created for experimentation or grown for body parts, and that human
life is never bought and sold as a commodity. (Applause.) America
will continue to lead the world in medical research that is ambitious,
aggressive, and always ethical.

Because courts must always deliver impartial justice, judges have a
duty to faithfully interpret the law, not legislate from the bench.
(Applause.) As President, I have a constitutional responsibility to
nominate men and women who understand the role of courts in our
democracy, and are well-qualified to serve on the bench -- and I have
done so. (Applause.) The Constitution also gives the Senate a
responsibility: Every judicial nominee deserves an up or down vote.
(Applause.)

Because one of the deepest values of our country is compassion, we
must never turn away from any citizen who feels isolated from the
opportunities of America. Our government will continue to support
faith-based and community groups that bring hope to harsh places. Now
we need to focus on giving young people, especially young men in our
cities, better options than apathy, or gangs, or jail. Tonight I
propose a three-year initiative to help organizations keep young people
out of gangs, and show young men an ideal of manhood that respects
women and rejects violence. (Applause.) Taking on gang life will be
one part of a broader outreach to at-risk youth, which involves parents
and pastors, coaches and community leaders, in programs ranging from
literacy to sports. And I am proud that the leader of this nationwide
effort will be our First Lady, Laura Bush. (Applause.)

Because HIV/AIDS brings suffering and fear into so many lives, I
ask you to reauthorize the Ryan White Act to encourage prevention, and
provide care and treatment to the victims of that disease.
(Applause.) And as we update this important law, we must focus our
efforts on fellow citizens with the highest rates of new cases, African
American men and women. (Applause.)

Because one of the main sources of our national unity is our belief
in equal justice, we need to make sure Americans of all races and
backgrounds have confidence in the system that provides justice. In
America we must make doubly sure no person is held to account for a
crime he or she did not commit -- so we are dramatically expanding the
use of DNA evidence to prevent wrongful conviction. (Applause.) Soon
I will send to Congress a proposal to fund special training for defense
counsel in capital cases, because people on trial for their lives must
have competent lawyers by their side. (Applause.)

Our third responsibility to future generations is to leave them an
America that is safe from danger, and protected by peace. We will pass
along to our children all the freedoms we enjoy -- and chief among them
is freedom from fear.

In the three and a half years since September the 11th, 2001, we
have taken unprecedented actions to protect Americans. We've created a
new department of government to defend our homeland, focused the FBI on
preventing terrorism, begun to reform our intelligence agencies, broken
up terror cells across the country, expanded research on defenses
against biological and chemical attack, improved border security, and
trained more than a half-million first responders. Police and
firefighters, air marshals, researchers, and so many others are working
every day to make our homeland safer, and we thank them all.
(Applause.)

Our nation, working with allies and friends, has also confronted
the enemy abroad, with measures that are determined, successful, and
continuing. The al Qaeda terror network that attacked our country
still has leaders -- but many of its top commanders have been removed.
There are still governments that sponsor and harbor terrorists -- but
their number has declined. There are still regimes seeking weapons of
mass destruction -- but no longer without attention and without
consequence. Our country is still the target of terrorists who want to
kill many, and intimidate us all -- and we will stay on the offensive
against them, until the fight is won. (Applause.)

Pursuing our enemies is a vital commitment of the war on terror --
and I thank the Congress for providing our servicemen and women with
the resources they have needed. During this time of war, we must
continue to support our military and give them the tools for victory.
(Applause.)

Other nations around the globe have stood with us. In Afghanistan,
an international force is helping provide security. In Iraq, 28
countries have troops on the ground, the United Nations and the
European Union provided technical assistance for the elections, and
NATO is leading a mission to help train Iraqi officers. We're
cooperating with 60 governments in the Proliferation Security
Initiative, to detect and stop the transit of dangerous materials.
We're working closely with the governments in Asia to convince North
Korea to abandon its nuclear ambitions. Pakistan, Saudi Arabia, and
nine other countries have captured or detained al Qaeda terrorists. In
the next four years, my administration will continue to build the
coalitions that will defeat the dangers of our time. (Applause.)

In the long-term, the peace we seek will only be achieved by
eliminating the conditions that feed radicalism and ideologies of
murder. If whole regions of the world remain in despair and grow in
hatred, they will be the recruiting grounds for terror, and that terror
will stalk America and other free nations for decades. The only force
powerful enough to stop the rise of tyranny and terror, and replace
hatred with hope, is the force of human freedom. (Applause.) Our
enemies know this, and that is why the terrorist Zarqawi recently
declared war on what he called the "evil principle" of democracy. And
we've declared our own intention: America will stand with the allies
of freedom to support democratic movements in the Middle East and
beyond, with the ultimate goal of ending tyranny in our world.
(Applause.)

The United States has no right, no desire, and no intention to
impose our form of government on anyone else. That is one of the main
differences between us and our enemies. They seek to impose and expand
an empire of oppression, in which a tiny group of brutal,
self-appointed rulers control every aspect of every life. Our aim is
to build and preserve a community of free and independent nations, with
governments that answer to their citizens, and reflect their own
cultures. And because democracies respect their own people and their
neighbors, the advance of freedom will lead to peace. (Applause.)

That advance has great momentum in our time -- shown by women
voting in Afghanistan, and Palestinians choosing a new direction, and
the people of Ukraine asserting their democratic rights and electing a
president. We are witnessing landmark events in the history of
liberty. And in the coming years, we will add to that story.
(Applause.)

The beginnings of reform and democracy in the Palestinian
territories are now showing the power of freedom to break old patterns
of violence and failure. Tomorrow morning, Secretary of State Rice
departs on a trip that will take her to Israel and the West Bank for
meetings with Prime Minister Sharon and President Abbas. She will
discuss with them how we and our friends can help the Palestinian
people end terror and build the institutions of a peaceful,
independent, democratic state. To promote this democracy, I will ask
Congress for $350 million to support Palestinian political, economic,
and security reforms. The goal of two democratic states, Israel and
Palestine, living side by side in peace, is within reach -- and America
will help them achieve that goal. (Applause.)

To promote peace and stability in the broader Middle East, the
United States will work with our friends in the region to fight the
common threat of terror, while we encourage a higher standard of
freedom. Hopeful reform is already taking hold in an arc from Morocco
to Jordan to Bahrain. The government of Saudi Arabia can demonstrate
its leadership in the region by expanding the role of its people in
determining their future. And the great and proud nation of Egypt,
which showed the way toward peace in the Middle East, can now show the
way toward democracy in the Middle East. (Applause.)

To promote peace in the broader Middle East, we must confront
regimes that continue to harbor terrorists and pursue weapons of mass
murder. Syria still allows its territory, and parts of Lebanon, to be
used by terrorists who seek to destroy every chance of peace in the
region. You have passed, and we are applying, the Syrian
Accountability Act -- and we expect the Syrian government to end all
support for terror and open the door to freedom. (Applause.) Today,
Iran remains the world's primary state sponsor of terror -- pursuing
nuclear weapons while depriving its people of the freedom they seek and
deserve. We are working with European allies to make clear to the
Iranian regime that it must give up its uranium enrichment program and
any plutonium reprocessing, and end its support for terror. And to the
Iranian people, I say tonight: As you stand for your own liberty,
America stands with you. (Applause.)

Our generational commitment to the advance of freedom, especially
in the Middle East, is now being tested and honored in Iraq. That
country is a vital front in the war on terror, which is why the
terrorists have chosen to make a stand there. Our men and women in
uniform are fighting terrorists in Iraq, so we do not have to face them
here at home. (Applause.) And the victory of freedom in Iraq will
strengthen a new ally in the war on terror, inspire democratic
reformers from Damascus to Tehran, bring more hope and progress to a
troubled region, and thereby lift a terrible threat from the lives of
our children and grandchildren.

We will succeed because the Iraqi people value their own liberty --
as they showed the world last Sunday. (Applause.) Across Iraq, often
at great risk, millions of citizens went to the polls and elected 275
men and women to represent them in a new Transitional National
Assembly. A young woman in Baghdad told of waking to the sound of
mortar fire on election day, and wondering if it might be too dangerous
to vote. She said, "Hearing those explosions, it occurred to me -- the
insurgents are weak, they are afraid of democracy, they are losing. So
I got my husband, and I got my parents, and we all came out and voted
together."

Americans recognize that spirit of liberty, because we share it.
In any nation, casting your vote is an act of civic responsibility; for
millions of Iraqis, it was also an act of personal courage, and they
have earned the respect of us all. (Applause.)

One of Iraq's leading democracy and human rights advocates is Safia
Taleb al-Suhail. She says of her country, "We were occupied for 35
years by Saddam Hussein. That was the real occupation. Thank you to
the American people who paid the cost, but most of all, to the
soldiers." Eleven years ago, Safia's father was assassinated by
Saddam's intelligence service. Three days ago in Baghdad, Safia was
finally able to vote for the leaders of her country -- and we are
honored that she is with us tonight. (Applause.)

The terrorists and insurgents are violently opposed to democracy,
and will continue to attack it. Yet, the terrorists' most powerful
myth is being destroyed. The whole world is seeing that the car
bombers and assassins are not only fighting coalition forces, they are
trying to destroy the hopes of Iraqis, expressed in free elections.
And the whole world now knows that a small group of extremists will not
overturn the will of the Iraqi people. (Applause.)

We will succeed in Iraq because Iraqis are determined to fight for
their own freedom, and to write their own history. As Prime Minister
Allawi said in his speech to Congress last September, "Ordinary Iraqis
are anxious to shoulder all the security burdens of our country as
quickly as possible." That is the natural desire of an independent
nation, and it is also the stated mission of our coalition in Iraq.
The new political situation in Iraq opens a new phase of our work in
that country.

At the recommendation of our commanders on the ground, and in
consultation with the Iraqi government, we will increasingly focus our
efforts on helping prepare more capable Iraqi security forces -- forces
with skilled officers and an effective command structure. As those
forces become more self-reliant and take on greater security
responsibilities, America and its coalition partners will increasingly
be in a supporting role. In the end, Iraqis must be able to defend
their own country -- and we will help that proud, new nation secure its
liberty.

Recently an Iraqi interpreter said to a reporter, "Tell America not
to abandon us." He and all Iraqis can be certain: While our military
strategy is adapting to circumstances, our commitment remains firm and
unchanging. We are standing for the freedom of our Iraqi friends, and
freedom in Iraq will make America safer for generations to come.
(Applause.) We will not set an artificial timetable for leaving Iraq,
because that would embolden the terrorists and make them believe they
can wait us out. We are in Iraq to achieve a result: A country that
is democratic, representative of all its people, at peace with its
neighbors, and able to defend itself. And when that result is
achieved, our men and women serving in Iraq will return home with the
honor they have earned. (Applause.)

Right now, Americans in uniform are serving at posts across the
world, often taking great risks on my orders. We have given them
training and equipment; and they have given us an example of idealism
and character that makes every American proud. (Applause.) The
volunteers of our military are unrelenting in battle, unwavering in
loyalty, unmatched in honor and decency, and every day they're making
our nation more secure. Some of our servicemen and women have survived
terrible injuries, and this grateful country will do everything we can
to help them recover. (Applause.) And we have said farewell to some
very good men and women, who died for our freedom, and whose memory
this nation will honor forever.

One name we honor is Marine Corps Sergeant Byron Norwood of
Pflugerville, Texas, who was killed during the assault on Fallujah.
His mom, Janet, sent me a letter and told me how much Byron loved being
a Marine, and how proud he was to be on the front line against terror.
She wrote, "When Byron was home the last time, I said that I wanted to
protect him like I had since he was born. He just hugged me and said,
'You've done your job, Mom. Now it is my turn to protect you.'"
Ladies and gentlemen, with grateful hearts, we honor freedom's
defenders, and our military families, represented here this evening by
Sergeant Norwood's mom and dad, Janet and Bill Norwood. (Applause.)

In these four years, Americans have seen the unfolding of large
events. We have known times of sorrow, and hours of uncertainty, and
days of victory. In all this history, even when we have disagreed, we
have seen threads of purpose that unite us. The attack on freedom in
our world has reaffirmed our confidence in freedom's power to change
the world. We are all part of a great venture: To extend the promise
of freedom in our country, to renew the values that sustain our
liberty, and to spread the peace that freedom brings.

As Franklin Roosevelt once reminded Americans, "Each age is a dream
that is dying, or one that is coming to birth." And we live in the
country where the biggest dreams are born. The abolition of slavery
was only a dream -- until it was fulfilled. The liberation of Europe
from fascism was only a dream -- until it was achieved. The fall of
imperial communism was only a dream -- until, one day, it was
accomplished. Our generation has dreams of its own, and we also go
forward with confidence. The road of Providence is uneven and
unpredictable -- yet we know where it leads: It leads to freedom.